Ready to Renovate? Here’s the First Move You Should Make

When the real estate market was in the dumps, snagging a great contractor was a simple task. With few people remodeling, no project was too small for hungry pros, many of whom were bidding at 10% to 40% below their boom-time rates.

Those days are gone. Remodeling spending is now up 30% from its low point, and single-family construction spending has doubled. Depending on where you live, a project that cost $50,000 in 2010 might now come in at $60,000 to $70,000.

“Materials costs are up, much of the skilled labor pool has jumped to the oil and gas industry, and contractors’ phones are ringing,” says Bernard Markstein, U.S. chief economist at Reed Construction Data.

To get the best help, you’ll need to be strategic.

Start with referrals. Begin by polling friends and tradesmen, and tell the contractor who pointed you in his direction.

Using a referral will do more than just ease your mind — it will also make you a priority for the pro, who wants to keep his clients and subcontractors happy.

Don’t be vague. When you reach out, show that you’ve put careful thought into the project by expressing a clear vision of what you want to accomplish and a sense of what you can spend.

Get his opinion. When a contractor comes to see the job, don’t jump right into discussing price. First ask for his input on the plan and on any initial sketches your architect has put together. This shows you value his knowledge and don’t just see him as a nail banger.

Plus, his answers will show you how he thinks — and whether you want to hire him. Is he channeling what you want? Great. But if he suggests lazy solutions or pricey add-ons, move on.

Now negotiate. Solicit bids from three or more contractors. Be sure to stoke competition by letting them know that you’re gathering multiple offers. Skip any bids that are wildly high or low.

Should your first choice still be over your budget, haggling is risky: He’ll probably either walk or cut corners on the project. Instead, let him know how much he’s over, and ask for some suggestions on how he might tweak the job to lower the price with minimal impact, says UCLA law professor Russell Korobkin, a negotiation specialist.

Remember to hold out a contingency of 10% to 20%, since many remodels mushroom over the course of the project.

Be flexible. This is also the time to nail down scheduling. Ask him for approximate start and end dates. But don’t press too hard. For a top contractor, at a fair price, you may to have to wait a bit.